Dodoma. The African Trade Insurance Agency (Ati) is providing a solution that would provide Tanzania with a viable option to attract needed investments while reducing future financing charges by up to $3 million (about Sh6.8 billion) annually.
This was revealed here yesterday by Ati’s resident underwriter in Tanzania, Ms Tusekile Kibonde, during a seminar that brought together a number of players in the financial sector. Tanzania is a founding member of Ati, a multilateral and pan-African institution that provides investment and credit guarantees to help member governments attract investments.
Ati is now proposing an arrangement whereby before the government approaches the international market with a borrowing request, it could provide a ‘credit wrap’ on the request.
This would trigger a reduction in the financing charges. In 2019, the arrangement helped Benin and Côte d’Ivoire to obtain close to $1 billion financing with tenures in the low-single digits and with 10 to 12-year tenures. “These terms have historically been off limits for most African governments as a result of the region’s high risk profile, which has led to a shortage of credit insurance,” said Ms Kibonde.
Ati bridges this gap by providing the required guarantees to its member governments along with the credibility of its S&P and Moody’s investment grade ratings. In the last five years in Tanzania, Ati has supported overall investments in areas such as the Standard Gauge Railway, the financial services, energy and infrastructure.
Ati has helped the government to attract investment worth over $2 billion, but it remains confident that it can do even more.
“As the representative to Tanzania on Ati’s board of directors, I can confirm that Ati has grown into a powerful partner that is respected by African governments as well as international financial institutions. ATI is therefore well positioned to provide a link to international markets that will benefit Tanzania and other governments,” said a director at Ati and the Tanzania Private Sector Foundation executive director, Mr Godfrey Simbeye.